Study on Design of Carbon-Credit s Cost Accounting System for Manufacturing Enterprises Problems

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1 International Symposium on Knowledge Acquisition and Modeling (KAM 2015) Study on Design of Carbon-Credit s Cost Accounting System for Manufacturing Enterprises Problems Chengzhi Liu, Bolun Liu, Ziang Yang Department of Accounting, Shaoyang University, Hunan, , China Abstract As the price of carbon credit gradually reflects the economic value caused by the scarcity of atmospheric environmental capacity, the structure in manufacturing enterprises products will be changed greatly. As an indispensable element of components, carbon credit will become an important component of production similar to traditional items as material & labor, etc. Therefore, manufacturing enterprises should reasonably set up its environmental management and accounting s and coordinate the work among related s; design the information carriers, accounting procedures and analysis indexes for carbon credit ; strengthen the internal control of its accounting and to set up its accountability center. Keywords-manufacturing enterprises; carbon credit accounting; system design. I. INTRODUCTION Total Emissions Control and quota trade are the worldwide mainstream policy for carbon emission reduction. Therefore, the pressure of carbon credit in manufacturing enterprises will become bigger and bigger, the proportion of carbon credit expenditures in production will be higher and higher, carbon credit will be linked to enterprises decision-making, the requirements for the fineness and accuracy of the accounting of carbon credit will be higher. And then the carbon credit accounting in manufacturing enterprises products should be designed as system engineering so as to ensure the accuracy of accounting. In this paper the organization, information and control system for the carbon credit accounting in products are designed respectively. II. THE DESIGN OF ORGANIZATION SYSTEM In manufacturing enterprises, the accounting of carbon credit s in products mainly involves enterprise environment, the accounting and relevant personnel, which form an organizational system for accounting. This system should be made up of enterprise s environmental, accounting and their staff. When enterprises constitute relevant institutions, they should clarify their responsibilities, authorities and main tasks. When they allocate relevant staff, they should clear-out their assignments and post duties, etc. A. To set up environmental The problems such as the deletion of enterprise environmental (management) and the delay of environmental disclosure are important factors that affect carbon credit s accounting. So firstly enterprises should perfect the systems for their environmental management and information disclosure as soon as possible, they are demanded to set up special and staff to manage their environment. Secondly, they should design the contents and s for their environmental disclosure according to the rules and characteristics of their accounting, on the basis of meeting the general contents of enterprises environmental disclosure, combining the requirements of carbon credit s accounting in products, and supply more specific, detailed and desirable systematic norms, so as to improve the internal quality of carbon credit s accounting. Thirdly, they should reinforce system design and binding force for carbon credit accounting. And make unified regulations for the form, time, content and technique for carbon emissions so that the carbon emissions in manufacturing enterprises and the information of carbon credit in products will be more comparative and useful in its industry even in the whole country. B. To set up enterprises Enterprises accounting generally belongs to the financial, however, some enterprises may set up a special to account and manage their. In manufacturing enterprises especially in large and middlesized enterprises, the accounting and management of are important parts in their financial accounting. Which involves the ascription, marketing and allocation of its s and expenses, and directly affects enterprises current profits and taxes. At present, enterprises accounting mainly is the accounting of their of material and labor and manufacturing, the accounting about carbon credit hasn t been carried out. In practical, the expenditure of enterprises carbon credit has directly been handled as period expenses. After the accounting of carbon credit has been carried out, the components of accounting and management in enterprises will be greatly enriched. Therefore, enterprises should support and guarantee the work at organization and human resources. Namely, setting up a special to check and manage the, which is not only the organization guarantee, but also an important condition to carry out the work The authors - Published by Atlantis Press 184

2 C. To organize and coordinate the carbon-credit s accounting in products Carbon-credit s accounting in manufacturing enterprises products is a job of great comprehensiveness, which can be finished with the coordination and cooperation of various s like environment, and production. So to organize different systems to work harmoniously is very important. Usually, enterprises accounting is mainly in the charge of, which plays a leading role in the whole process. At the same time, it needs the assistance and cooperation of various s. Environmental should supply the data of activity level and the report about carbon emissions monthly. The warehousing should offer in and out records or receipts about raw materials monthly, while the to keep finished products should offer in and out records or receipts about finished products monthly. The production management should offer statistics of working hours and production schedules. The purchasing should offer account payable receipts the same month. The sales should offer sales statements to make clear monthly sales. III. THE DESIGN FOR INFORMATION SYSTEM The accounting of manufacturing enterprises is an information system which mainly offers the information of their products. The design of information system for carbon credits in products is to plan to offer various aspects about products carbon credit information. Including the design for the carriers of accounting, which mainly define the category and format of relevant source documents and detail statements and the relations among them. Secondly, the design for accounting handling procedure mainly designs the accumulation and allocation procedures for carbon credits. Scientific handling procedures may have different efficiency and effectiveness. Thirdly, they should design scientific and rational analysis index system. A. The design of the carriers for accounting The carriers of accounting for products carbon credit mainly include source documents and accounting ledger. The source documents involved in the process of carbon credits accounting in manufacturing enterprises products mainly are the source information offered by environmental protection and assets management. The can also make internal source documents, so as to meet the need of bookkeeping of accounting in products carbon credit. In the process of accounting, enterprises should add general ledger and subsidiary ledger of assets and the general ledger and subsidiary ledger of liability for carbon credit. Both carbon credits assets and liability account should use the format of amount sum subsidiary ledger. In addition, they also need to add a detailed column for carbon credit to the subsidiary ledger of and income account such as the subsidiary ledger of production, management, manufacturing, investment income and grant, etc, to check the revenue and expenditure because of the occurrence of carbon credits. B. The design for accounting procedure The carbon credits accounting procedure in manufacturing enterprises products actually is to accumulate and allocate carbon credit s. After it is accumulated and allocated a few times, carbon credit s and total will finally be gotten. Then we ll introduce the methods to accumulate and allocate carbon credits in the following passage. The accumulation of is to collect, sort and summarize the data of products. The assembly summarized the production of a product is the accumulation point of or assembly in the process of accounting. After manufacturing enterprises participate in carbon emissions trading, the carbon emissions generated in the production and operation processes should correspond to the corresponding obligation of delivery to fulfill. As the value of carbon credit existed in the carbon emission trading market objectively, the carbon credit s obligation of delivery in manufacturing enterprises is an actual consumption of value, which is similar to the consumption of materials and labor in production process, should be counted to the production. During the production and operation process of manufacturing enterprises, the consumption of carbon credit actually plays an important role in many aspects, for example, some carbon emissions are produced in the process of production, maintenance of production equipment and management, some are produced during the process of non-industrial production. In the process of accounting, the consumption about carbon credit should be counted into products production, should be accumulated to item. For instance, the consumed of carbon credit which is directly helpful to the forming of products should be counted to the carbon- credit item, while the carbon credit generated during the process of maintenance equipment and management should be counted to the manufacturing. It should not be counted to production, however, it belongs to period, so it should be counted to management or selling, etc. The carbon credit produced during the process of purchasing and building fixed assets and other assets should be counted to neither production nor period, while counted to project in process or other related subjects. The consumed carbon credit which is directly helpful to the production of products should be counted to direct according to the corresponding products, be included to direct material of various of products. However, the of a carbon emitter is consumed by several patches of products. For example, the carbon emissions produced by some generic device, it is the occurred among various products in the production, should be counted into the of various products and should be allocated by an scientific and rational method. If 185

3 manufacturing enterprises use a relatively accurate carbon consumables quota, or the ration of rated consumption of carbon credits, or the ratio of norm of materials to allot carbon credits. The concrete formula is: The allocation rate = the actual consumption of carbon credit (or actual ) the sum of rated consumption of carbon credit in various products (or the sum of norm ) The planned carbon credits quantities of a product () = the rated carbon credit s consumption of the product allocation ratio Besides the above method of allocation, carbon credits can be allocated in other methods. For example, the carbon credit generated by the electric power used in common, if we are sure of the working hours that each machine to produce a product, it is more reasonable to allocate the according to machine-hour. The carbon credit generated by auxiliary production ( the of power, gas and heat supply), can be allocated in the way of allocating auxiliary production, but can not be allocated after combining with the auxiliary production, so as to ensure the accuracy and completeness of carbon credit s accounting in a product. The carbon credit in manufacturing enterprises production process should be counted as the debtor in the account of production and the subsidiary ledger it belongs to, meanwhile in subsidiary ledger it should be accounted separately as a special column of carbon credit. In addition, the carbon credit in auxiliary and those in production workshop and administration for managing and organizing production, should be counted into production auxiliary production, manufacturing and management, etc, and counted as the debtor in their subsidiary ledgers. As for the carbon credit used for nonproduction should be counted into other related items. C. The design of analysis indexes for products carbon credit When enterprises formulate their, no matter what items are calculated, they should define their quantitative criteria and price criteria and calculate the of the item by multiplying the two. No matter what it is, the quantitative criterion or price criterion, it can be a criterion under ideal condition or normal state, enterprises can calculate its ideal or normal. The consumption of carbon credits in manufacturing enterprises products is defined by statistical method, industrial engineering method and other technical analysis method. It is the consumption of carbon credit needed to produce unit product under present technical conditions. The following is a case of of product carbon credit. TABLE I. THE STANDARD COST OF CARBON CREDIT IN A PRODUCT s technological emission I direct emissions technological emission II Indirect emission 45yuan/t 45yuan/t 45yuan/t price quantity 0.35t 0.34t 0.26t 15.75yuan 15.3yuan 11.7 of unit 42.75yuan product The of carbon credit is a target, because of various reasons, the actual carbon credits may not accord with the target. There are differences between actual and, which are called differences of products carbon credits, or are short for differences of carbon credits. The differences of carbon credits reflect the actual divorces from the predetermined target. To correct the differences, we should analyze the differences and the reasons that caused the differences, so as to adapt some effective measures to correct it. There are two main reasons that caused the differences: one is its price divorces from, the other is its consumption divorces from. The former is counted by actual consumption, which is called price differences of carbon credits, while the latter is counted by price, which is called quantitative difference of carbon credit. The price differences are produced during the management and trading of carbon credits, so we should not ask production to undertake the responsibility, while let the management and trading s explain it and undertake the corresponding responsibility. There are many reasons why the assets management and transaction cannot supply carbon credits according to, Such as, the fluctuation of transaction price in the market, the adjustment of its distribution methods, the change of supply-demand situation in the market and the reasonableness of the operation in its transaction market. The quantity differences of carbon credits is produced during the production, which reflects production s performance in carbon credits control and in implementing saving energy. There are many reasons to cause the quantitative differences of carbon credits, For instance, negligence in the operation process may cause waste products and materials increased and then make carbon emission increased; workers operation techniques are improved and then make their working efficiency improved, carbon emissions reduced; the use of new equipment and techniques may reduce the carbon emissions, If enterprises use obsolete machines and equipment or repair and maintain them improperly, carbon emissions will also be increased. Therefore, only by investigation and research can we define who will responsible for the quantitative differences of carbon credits. 186

4 IV. THE DESIGN FOR CONTROL SYSTEM A. The internal control of carbon credits accounting in products The main contents of internal control of carbon credits accounting in manufacturing enterprises products are the following: firstly, carbon emissions should be measured under the specific or general mandate of enterprise management level. The key internal control points are the mandate for the measurement and report of carbon emissions. Secondly, the recorded carbon credit is real instead of imaginary. The key internal control point is that the accounting of carbon credit is based on the detailed statements of carbon emissions and the allocation of carbon credit that have been audited. All of the of carbon credit reflects in the production. The key internal control points are all detailed statements of carbon emissions and the distribution list of carbon credit are numbered in advance and registered on the account. If the carbon credit is just in its period, it should be recorded in right amount in the proper account. The key internal control points are that the method of accounting and distribution of the carbon credit should be proper and consistent, and the procedures of enterprises accounting and financial settlement should be proper and consistent. The operator and recorder of carbon credits trading should be mutual independent. The key point of its internal control is operators and recorders duties should be separated from each other. B. How to set up and check carbon credits responsibility center The center of manufacturing enterprises refers to the responsibility center just to produce, not to acquire revenue. Usually its operating activities just have effects on the fluctuation. These responsibility centers just check its control performances. From the characteristics of carbon credits, it is not only manufacturing enterprises item, but also can be used as investment instrument, in theory, it should not be checked as pure center, but when checked the reserve and disbursement of enterprises carbon credits, the check is mainly correspond to the delivery responsibility produced by carbon emissions, so it can be set up and checked as center. In manufacturing enterprises, the setting of center for carbon credits should not only combine with the characteristics of carbon emissions but also accord with the various characteristics of production and management. Usually, the units which can organize production and management separately, those whose carbon emissions can be recognized independently and those whose control of carbon credits can be checked alone, from factory or to workshop or team, all can be regarded as responsibility center for carbon credits. Meanwhile, the responsibility and of carbon credits are two concepts that have both connections and discrepancies. The responsibility and of carbon credits produced in a certain period in manufacturing enterprises should be consistent, but the two have obvious differences, which mainly reflect on the following two aspects: Firstly, the of carbon credits is checked according to products, while its responsibility is checked through center, and it is the controllable of each center. Secondly, the of carbon credits is the compensation for fixing the consumption of carbon credits, while the responsibility of carbon credits aims to check the completion of energy saving and reducing the responsibility of carbon credits, find out the insufficiency and the causes, take steps and then reduce. Then we give samples to illustrate the differences between the two kinds of s. Let us suppose that a certain manufacturing enterprise produce two kinds of products, A and B. The enterprise has two production s a and b and two management s c and d, all of them are center of carbon credits. All of the of carbon credits related to the two kinds of products in a certain month is 51 thousand yuan, the table 11 is a contrast between carbon credits and responsibility worked out according to the allocation of carbon credits in the two products and various s. TABLE II. A CONTRAST BETWEEN CARBON-CREDIT S COST AND RESPONSIBILITY COST Ⅰ. carbon- credit s of all products 1000 products A 500 products B items total unit total unit carbon-credit s Ⅱ. carbon-credit s responsibility in various s items a Department b c d carboncredit s As carbon-credit s center has no income, they are just responsible for carbon credit, the evaluation and check for it should mainly be put on carbon-credit s responsibility. The implementation of responsibility and the differences between responsibility and the budget will be reflected by compiling responsibility reports about carbon credit and then analyze the causes produced the differences. During the compiling, we should not only pay attention to its real-time and applicability, and try to let the reporting time conform with the time to plan and control production, make the responsibility report meet enterprise various management level and managers need for the information about carbon emissions and carbon credits expenditure, but also pay attention to the report s correlation and tangibility,and make sure that the information in the reports is accurate and reliable, and then make need of management of all levels manage the controllable carbon emissions in their responsibility effectively. The responsibility reports of carbon credit center generally include the budgets, actual numbers and differential numbers for various detailed items of controllable. The settlement for non-controllable 187

5 carbon credit of the itself can adapt the following two means, one is that to ellipsis all, not to list it, so that the main points are stressed; the other is not to put non-controllable into performance report as reference data, so that the managers can get a complete picture of carbon credit s expenditure in a period of time. The variance in responsibility report for carbon credit is an important symbol to check and evaluate the center s work performance. If the actual number is less than the budget, it is called favorable variance, which indicates the savings on carbon credit, means the reduces carbon emissions, and also does great contribution on saving energy and reducing pollutant discharge; if the actual number is larger than the budget, it is called unfavorable variance, which indicates the overrun of carbon credit, means that the increases carbon emissions and needs to save energy and improve the efficiency to protect environment. ACKNOWLEDGEMENTS Project supported by Sociology Science Foundation of Hunan Province, (No: 14YBA344); Project Supported by Scientific Research Fund of Hunan Provincial Education Department (No: 14A130). 188

6 The following terms are used in this Standard with the meanings specified: Inventories are assets:

6 The following terms are used in this Standard with the meanings specified: Inventories are assets: International Accounting Standard 2 Inventories Objective 1 The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the